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Global Judgments

Chairman and CEO John F. Welch Jr.'s ego aside, America's $100.5 billion General Electric Co. clearly is more than a legend in its leader's mind, say the panel of experts who helped select IndustryWeek's 100 Best-Managed Companies. "I continue to put GE at the top of my list," states R. Charles Moyer, dean of Wake Forest University's Babcock Graduate School of Management, Winston-Salem, N.C. Adds Jude T. Rich, chairman of Sibson & Co., Princeton, N.J., "A common characteristic of the Best-Managed Companies is their wealth of talent, and GE is the wealthiest of all." CEO Welch provides "exemplary leadership," says Warren Bennis, distinguished professor of business at the University of Southern California, Los Angeles. Howard Singer, managing partner for manufacturing and distribution at Grant Thornton LLP, Appleton, Wis., praises IBM Corp., another U.S.-based "Blue Chip," for reincarnating itself as a technology and services firm. Its "strategy, quality of leadership, [and] attitude toward employees will help propel the company into new markets and [provide] better service to existing customers," he predicts. And AlliedSignal Inc., the Morristown, N.J., aerospace and materials firm that's acquiring Honeywell Inc., gets Singer's applause for aggressively embracing lean manufacturing. Alcoa Inc., Mexico's Cemex SA de CV, Japan's Honda Motor Co. Ltd., Johnson Controls Inc., and the UK's Smiths Industries PLC impress Edward E. Frey, a San Francisco-based vice president of Booz, Allen & Hamilton Inc., with their abilities to manage "aggressive organic growth while still managing the rest of the business -- cost, balance sheet, productivity, assets -- to deliver exceptional shareholder value." Frey cites Abbott Laboratories, Amgen Inc., Merck & Co. Inc., Finland's Nokia Corp., Qualcomm Inc., and Japan's Sony Corp. for systematically developing and marketing "a stream of new products to capture or continue to dominate markets." And he singles out Cisco Systems Inc., GE, and Solectron Corp. for growing through acquisitions and "actually [creating] value" after the acquisitions. EMC Corp., Eli Lilly & Co., and Nokia are among the companies that Piero Morosini, a professor of strategy at IMD (International Institute for Management Development), Lausanne, Switzerland, says "epitomize the great opportunities of growth and profitability given by technological revolutions, careful R&D management, and manufacturing excellence. They ride the wave of our profound economic transformation into the 21st century." Zurich-based ABB Group grabs Peter T. Ward's attention. "They have a terrific approach to manufacturing and logistics and have built great capabilities to win in a competitive [industrial-products] industry," says the associate professor of operations management at Ohio State University's Fisher College of Business in Columbus. Michael E. McGrath, managing director of Pittigglio Rabin Todd & McGrath in Weston, Mass., praises Xerox Corp. for successfully executing the transition from a light-lens to a digital firm, a switch that he observes "has been fatal for most companies." Intel Corp. is among the companies ranking high with Edward A. Snyder, dean of the University of Virginia's Darden School. "I see the beginnings of a vision of broader scope." Meanwhile, India's Hindustan Lever Ltd. is "a fine example of a multinational corporation that has demonstrated excellent performance and retained market leadership in one of the world's most complex and demanding markets," judges Munesh Khanna, a partner in corporate finance at Arthur Andersen in Mumbai (Bombay). Germany's SAP AG "has become the closest thing to the Microsoft of ERP [enterprise resource planning] and will keep dominating their market," says Jeffrey Liker, professor of industrial and operations engineering at the University of Michigan, Ann Arbor. And while asserting that Volkswagen AG is Europe's leading automaker, Liker contends Japan's Toyota Motor Corp. "is still the world's best automaker in manufacturing, logistics, and product development." Indeed, despite Japan's economic recession, "Toyota continues its operations excellence when others have fallen away," states Danny Samson, a professor at the University of Melbourne in Australia. In Michael Lord's estimation, Dell Computer Corp. remains the standard by which many other companies are judged. "Dell's business model has helped revolutionize thinking about supply chains, outsourcing, inventory, working capital, and mass customization," contends Lord, a professor at Wake Forest's Babcock School. Dell has "one of the finest lean-manufacturing operations I have ever seen," says John H. Puckett, president of Visions of Excellence, Broomfield, Colo. But among all the kudos comes a note of caution. "Many of this year's 100 Best-Managed Companies have two critical problems to solve if they are to stay on future years' lists," warns John Mariotti, president and CEO of the Enterprise Group, Knoxville, Tenn., and an IW contributing editor. Those issues are, first, success, which Mariotti says breeds arrogance and complacency, and second, bigness, which he contends slows decision-making, builds bureaucracy, and turns focus inward. "Even behemoths like GE and IBM must develop strategies and structures that support speed -- in both decision and execution," Mariotti insists. "With strong leadership, they can do this. But it is neither easy nor certain."